Verizon connects with son of WorldCom in $6.7bn deal

Verizon, America's largest telecommunications firm, yesterday agreed a $6.7bn (£3.5bn) takeover of rival MCI, the latest in a flurry of deals in the industry.

The acquisition closes the book on the remarkable recent history of MCI, the firm that emerged from the wreckage of WorldCom.

At its peak WorldCom was valued at $180bn, but in 2002 filed for the biggest ever bankruptcy after an $11bn accounting fraud was uncovered.

The firm's former chief executive, Bernard Ebbers, is now on trial in Manhattan accused of playing an active role in orchestrating the fraud.

Verizon snatched MCI from the hands of another American telecoms firm, Qwest Communications, which had been pursuing its own deal with the company.

The agreement is the third large telecoms merger in the United States in two months. In December, the mobile phone network Sprint announced a $35bn takeover of rival Nextel. Two weeks ago SBC Communications agreed to buy AT&T for $16bn.

The board of MCI agreed to the Verizon offer after an intensive round of meetings over the weekend.

Verizon is understood to have bid less than Qwest, but MCI directors were concerned about the long-term prospects. Qwest, which serves local phone markets in 14 states, has a market value of $7.5bn and was hurt by its own accounting scandal. Verizon has a market value of more than $100bn.

The combined Verizon-MCI will cut 7,000 jobs from a total workforce of 250,000.

Verizon is the dominant local phone company in north-eastern United States and is a leading mobile phone firm through a joint venture with Britain's Vodafone.

MCI, which has its roots in long-distance services, is regarded as valuable for its business customers as well as being a huge network that carries much of the world's internet traffic. It has 14m residential and more than 1m corporate customers.

"This is the right deal at the right time," said Verizon chairman and chief executive Ivan Seidenberg.

"It is a natural and logical extension of Verizon's strategy to transform our company to serve growth markets and offer broadband technologies."

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